Argentina is making strong efforts to boom its natural gas output and supply, carrying out new pipeline and transport projects and auctions with an aim to balance the country’s production and demand, according to media reports citing the energy secretary.
The government could possibly fix contracts with an estimated value of up to $1.8 billion, by September, to construct pipeline for transporting natural gas from Argentina’s largest gas producing region, Vaca Muerta, to the country’s capital, Buenos Aires, Minister Gustavo Lopetegui said during a briefing at an energy conference in Houston.
The pipeline designed to be built in two phases could move as much as 40 million cubic meters of natural gas per day, more than half of Vaca Muerta’s current gas production.
The Vaca Muerta shale development will require future investment ranging from $5 billion to $10 billion per year, from $4.3 billion now to step up its growth, Lopetegui said, adding at least four projects in Vaca Muerta have passed from pilot stage to commercial development in recent months.
Vaca Muerta’s oil production is expected to reach 100,000 bpd in the second half of this year from the current level of 80,000 bpd.
The country also intends to launch monthly auctions for offering domestic gas and will release in May a separate four-year gas auction for offering winter gas at prices indexed to imported liquefied natural gas (LNG).
Argentina is a net gas producer with output largely from Vaca Muerta, one of the world’s largest reserves of shale oil and gas. The country now imports natural gas through a pipeline from Bolivia, and it purchases costly liquefied natural gas (LNG) to ensure its supply during the winter.
With increasing domestic gas production, Argentina has also recently resumed gas exports to Chile and Brazil and is working to make the exports a normal thing.
To maintain growth, Vaca Muerta needs bigger and continuous investment in exploration and production and in new pipelines, storage terminals, and railways to transport and ship oil and gas.
“Vaca Muerta must grow harmonically so it is possible to produce, transport and sell without problems,” the secretary said, adding that some producers have made good on large reductions in production cost, removing one of the play’s biggest obstacles to growth in recent years.
Argentina’s energy trade imbalance, which commenced in 2011, has been recovering in recent years as domestic crude and gas output rises, gas exports resume and subsidies ease.